The Philippines and Hong Kong are joining forces in a fintech partnership to tap into the unbanked market in the region.
Consumer credit is scarce is the Southeast Asian nation, but Philippine conglomerate JG Summit Holdings and Hong Kong-based Oriente are aiming to solve the financial exclusion problems for the unbanked and small businesses.
According to a 2016 World Bank blog, there are 264 million adults who are still unbanked in Southeast Asia. Many who don’t have access to traditional banking services either save their money under their mattress or borrow from loan sharks, paying high interest rates.
Currently, only 50 percent of adults in ASEAN (Association of South East Asian Nations) have an account at a financial establishment; however, by 2020, it’s hoped that that number will increase to 70 percent. The World Bank state that rates of financial exclusion are higher among the poor, those living in rural areas and those who are less-educated.
In a report from the Nikkei Asia Review, the fintech duo are creating a digital financial services marketplace for loans such as school fees or unexpected medical bills. The team are planning to launch their service early next year.
According to the Manila Bulletin, the Philippines central bank, the Bangko Sentral ng Pilipinas’ (BSP), said in January that 86 percent of Filipino households are unbanked or don’t have access to a deposit account because they don’t have enough money left over to save.
However, some of those surveyed also said that they don’t have a bank account because they don’t like to deal with banks or financial institutions because they don’t trust them.
The Philippines is ranked as the third largest receiver of remittances in the world with nearly $30 billion going into the country last year; India is number one followed by China.
With the use of bitcoin increasing in the country this may present an ideal opportunity for the people. Compared to normal remittance routes, bitcoin offers a cheaper and faster alternative.
Several things are already taking place, which are improving Filipino access to finance such as the creation of the Token Hub Asia in the Philippines. This is a remittance service for altcoin Eternal Coin (XEC) serving the Philippines, Japan, Hong Kong, and Korea. Users are able to send funds directly to a person’s mobile.
Not only that, but the Philippines launched its first two-way bitcoin ATM in 2015 in the heart of Manila’s financial district, helping to pave the way for increased popularity in the country.
Featured image from Shutterstock.